Insights 
VT 
Australia’s S&P Global Services PMI was recorded at 52.5 in October, falling short of the expected 53.1. This measure indicates the economic health of the services sector, with a score above 50 signalling expansion.
In related financial movements, the USD/CAD surged to a seven-month high, reaching above 1.4100 due to falling crude oil prices. Meanwhile, WTI crude prices dropped to near $60.00 amidst increasing US oil inventories.
Global Economic Influences
Economic dynamics are further influenced by China’s Premier Li, who stated that unilateral protectionist measures have heavily impacted the global economic order. The PBOC set the USD/CNY reference rate at 7.0901, slightly above the previous 7.0885, while AUD/USD lingered around 0.6450 after China’s Ratingdog PMI data.
Gold prices climbed slightly amidst worries about a possible US government shutdown. Meanwhile, the financial market showed mixed performance with the EUR/USD maintaining gains at roughly 1.1500, influenced by apprehensive ECB policy outlooks. Other parts of the financial market experienced downturns, notably GBP/USD, which has reached new lows.
Given today is November 5, 2025, the recent miss in Australia’s services PMI points to a slowing economy. We see this as a signal to consider bearish positions on the Australian dollar, especially since it is already struggling near 0.6450 due to weak data from China, its largest trading partner. Derivative traders might look at buying put options on AUD/USD, targeting levels below 0.6400 in the coming weeks.
The weakness in crude oil, with WTI now near $60 a barrel, reinforces a broader theme of slowing global demand. This price is significantly lower than the $80-$90 range we saw for much of 2024, and rising US inventories, which the EIA reported as a 3.5 million barrel build last week, suggest this trend may continue. We believe selling call options on crude oil futures could be a prudent strategy to collect premium while betting on a continued price cap.
Market Trends and Strategies
At the same time, clear signs of risk aversion are emerging, with concerns over a potential US government shutdown pushing capital into safe havens. Gold is holding just below the remarkable $3,850 level, showing there is a strong bid for protection. The current high implied volatility makes buying straddles on gold futures an interesting play to capture a large price swing, regardless of direction, as political deadlines approach.
The strength of the US dollar against commodity currencies like the Canadian and Australian dollars is a key trend to follow. With the USD/CAD exchange rate breaking above 1.4100 to a seven-month high, we anticipate this momentum could persist if oil prices remain depressed. Traders could use futures to maintain long exposure to the US Dollar Index (DXY) as a hedge against the broader global slowdown.
